Legal Updates

Foreclosure of assets of a person who does not owe money is defamation and the defenses under law do not apply

September 2, 2020
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Published in Afik News 318 23.09.2020

A business owner took a loan and after failing to repay, a legal execution case was opened against him. Under a settlement agreement, the business owner paid his full debt but the lender did not close the execution case for 11 years and even carried out foreclosure proceedings against him.
The Court held that the business owner is entitled to compensation for the damage to his good name. The lender was negligent in not reporting the payments to the execution case and closing the case. Taking collection proceedings where these proceedings are not required may constitute defamation, as these may present the person to the public as a "debtor" and "needy" who does not repay his debts to creditors, thereby actually harming that person's dignity. Once the proceedings have been taken illegally, the defenses provided by law are not applicable therefore the business owner is entitled to compensation.

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